Comments come two years after he called employees unruly "animals" and comparing himself to a cattlemaster

Terry Gou, 63 -- the CEO and major shareholder of Hon Hai Precision Industry Comp, Ltd. (TPE:2317) -- is making headlines again for interesting comments he made at his company's annual shareholders’ meeting.

I. Mission to Replace Migrant Workers With Machines is Moving Ahead

At one point he dropped a hint that Hon Hai's massive subsidiary Foxconn may have completed work on an automated plant for its top consumer electronics client, Apple, Inc. (AAPL). The factory lies in Chengudu, China he says, elaborating:

We haven’t talked much about the factory, but it’s manufacturing a product from a very famous company.

Foxconn also makes motherboards and laptops for most major PC OEMs, with orders of several million for most of the world's top PC makers. It also manufactures all of the current generation of video game consoles and Amazon.com, Inc.'s (AMZN) Kindle eReaders/tablets.

But it seems likely that Apple would get first privilege at Foxconn's new automated assembly line for a number of reasons. As the primary manufacturer of the roughly 60 million iOS devices Apple sold in Q1, Apple is likely far and away Foxconn's largest client, with annual device orders approaching a quarter billion units.

Some are less than happy with the Taiwanese CEO, complaining that he's abusing his workers, while looking to replace them with robots. But that's what's come to be expected in recent years as Foxconn's success -- and controversies -- have exploded.

While he prefers to be referred to by his Anglicized name, Terry Gou, Mr. Gou's true name is Gou Tai-ming. He got in on the ground floor of the U.S. outsourcing trend, designing connectors for the Atari console at a small startup factory in Taiwan in 1980. By 1988 he had moved to China, setting up a factory in Shenzhen.

Today, Foxconn has expanded astronomically to account for a whopping 40 percent of all consumer electronics manufacturing worldwide. While it has facilities in Europe, Mexico, and South America, the heart of its manufacturing empire still lies in China where it has 13 factories in nine cities. Foxconn is China's biggest employer and its Shenzhen facility is a veritable "city" of its own, with between 250,000 and 450,000 seasonal employees.

Most of the assembly of Apple products has traditionally been done in Shenzhen.

Aside from the employees who committed suicide -- who were compensated under the company's insurance plan -- at least one employee was allegedly "worked to death". Foxconn refused to give that employee's family anything.

Perhaps more than anything, Mr. Guo's response rubbed many the wrong way. At his 2012 annual shareholders meeting two years ago, he remarked in Chinese [translated]:

Hon Hai has a workforce of over one million worldwide and as human beings are also animals, to manage one million animals gives me a headache.

The attitude struck many as heartless for someone with so much money governing a workforce that he paid so little. Indeed many of his policies -- including punishing employees who talk while working on the assembly line or who take too many lavatory breaks -- seem to border on inhumane.

In 2010 when the suicides struck, Foxconn employees were making around $140 USD a month ($1,680 USD/year), according toABC News, while Mr. Guo's 13 percent stake in Hon Hai made him worth roughly $5.9B USD.

Others countered such criticism pointing to the charitable work Mr. Guo had done in his parents’ former hometown in Gewan, Shanxi Province, China.

His defenders, though, will have a tough time defending some of his remarks at the shareholders meeting. He first characterized the dead workers as greedy gold-diggers, complaining:

We at first gave a compensation that was so high, the families of the suicide victims’ would never be able to spend it all.

To put that claim in context, employees who attempted suicide, but failed were given roughly CN¥180,000 in a one-off "humanitarian" payment -- or about $29,000 USD. The families of those who actually succeeded in killing themself on average were paid around CN¥100,000 -- or roughly ~$16,000 USD. At the 2010 national average wage for migrant manufacturers ($196 USD per month) that's roughly seven years worth of pay for the workers who killed themselves or 12 years for those who failed. It's a lot of money for a migrant worker's family, to be certain, but "more than they could spend" seems like a pretty harsh exaggeration.

But he didn't stop there. He cited a statistic he claimed to have read in "some news article" that stated that mosquitos were the leading cause of death worldwide, followed by suicide. Actually neither suicide nor malaria are in the top ten causes of death, let alone the top two, according to the World Health Organization (WHO).

From that flawed statistic, his rant took an even more troubling turn. He remarked:

This [the suicides] is what happens when your company reaches a certain scale. It wasn’t because the workers were tired. Some of it was because the work is monotonous, but 90 percent of it had to do with personal relationships or because of family disputes.

It's sad to see such comments, but this isn't the first time we've seen them, certainly. In 2010 he stated:

If a worker in Taiwan commits suicide because of emotional problems, his employer won't be held responsible, but we are taken to task in China because they are living and sleeping in our dormitories.

That claim seems highly specious as the family members and friends of the dead workers almost all claimed that their chief reason for wanting to kill themselves was feelings of hopelessness about their harsh job and low pay. Many family members said their deceased sons or daughters had sadly wanted to send a message about Foxconn's abusively low pay.

And ironically, if that was the employees' intent it worked. Perhaps Mr. Guo is more bitter that today base employee wages for Foxconn's migrant workers in China are roughly CN¥2500 (~$402 USD/month) on average -- nearly three times what they were in 2010. The unruly "animals" had cut into Mr. Guo's profit.

While his employees are reportedly enduring hellish working conditions, billionaire Foxconn chief is enjoying a dream life. He recently married his much younger dance teacher (left).
[Image Source: Taiwan News/Forbes]

In his book, The Sayings Of Terry Gou, which employees are virtually forced to read and quote, he comments:

A leader must have the decisive courage to be a dictator for the common good... Behind every accomplished disciple, there is a stern mentor... You can't go wrong trying to stick with the strictest and most demanding boss.

Together his words paint a picture that this billionaire king of Chinese manufacturing views himself as a wrangler of sorts, forever driving his obedient herd about in its pens. In Mr. Guo's own words his employees are animals -- and like many ranchers he seems to have little sympathy if one of his herd "falls off". After all, to him they're just animals -- he can always find more to replace those that fall, be they men or machines.

quote: After all, the whole point of applying technology to work/business is to allow humans to have to do less and less work themselves, is it not?

It depends on who is writing the check and what their objective is. Most big business are after predictability of production and improved quality that comes with certain automation technologies; but if you can produce the product at a lower price, that is the biggest reason. With corporations treating employs like a liability, the elimination of a few thousand jobs is a winner for them as well.